A trove of secret documents
details the US government's global push for shale gas.
—By Mariah Blake
One icy morning in February
2012, Hillary Clinton's plane touched down in the Bulgarian capital, Sofia,
which was just digging out from a fierce blizzard. Wrapped in a thick coat, the
secretary of state descended the stairs to the snow-covered tarmac, where she
and her aides piled into a motorcade bound for the presidential palace. That
afternoon, they huddled with Bulgarian leaders, including Prime Minister Boyko
Borissov, discussing everything from Syria's bloody civil war to their joint
search for loose nukes. But the focus of the talks was fracking. The previous
year, Bulgaria had signed a five-year, $68 million deal, granting US oil giant
Chevron millions of acres in shale gas concessions. Bulgarians were outraged.
Shortly before Clinton arrived, tens of thousands of protesters poured into the
streets carrying placards that read "Stop fracking with our water"
and "Chevron go home." Bulgaria's parliament responded by voting
overwhelmingly for a fracking moratorium.
Clinton urged Bulgarian
officials to give fracking another chance. According to Borissov, she agreed to help fly in the "best specialists on these
new technologies to present the benefits to the Bulgarian people." But
resistance only grew. The following month in neighboring Romania, thousands of
people gathered to protest another Chevron fracking project, and Romania's
parliament began weighing its own shale gas moratorium. Again Clinton
intervened, dispatching her special envoy for energy in Eurasia, Richard
Morningstar, to push back against the fracking bans. The State Department's
lobbying effort culminated in late May 2012, when Morningstar held a series of
meetings on fracking with top Bulgarian and Romanian officials. He also touted
the technology in an interview on Bulgarian national radio, saying it could
lead to a fivefold drop in the price of natural gas. A few weeks later,
Romania's parliament voted down its proposed fracking ban and Bulgaria's eased
its moratorium.
The episode sheds light on a
crucial but little-known dimension of Clinton's diplomatic legacy. Under her
leadership, the State Department worked closely with energy companies to spread
fracking around the globe—part of a broader push to fight climate change, boost
global energy supply, and undercut the power of adversaries such as Russia that
use their energy resources as a cudgel. But environmental groups fear that
exporting fracking, which has been linked to drinking-water contamination and earthquakes at home, could wreak havoc in countries with
scant environmental regulation. And according to interviews, diplomatic cables,
and other documents obtained by Mother Jones, American officials—some with deep
ties to industry—also helped US firms clinch potentially lucrative shale concessions
overseas, raising troubling questions about whose interests the program
actually serves.
Geologists have long known
that there were huge quantities of natural gas locked in shale rock. But
tapping it wasn't economically viable until the late 1990s, when a Texas
wildcatter named George Mitchell hit on a novel extraction method that
involved drilling wells sideways from the initial borehole, then blasting them
full of water, chemicals, and sand to break up the shale—a variation of a
technique known as hydraulic fracturing, or fracking. Besides dislodging a
bounty of natural gas, Mitchell's breakthrough ignited an energy revolution.
Between 2006 and 2008, domestic gas reserves jumped 35 percent. The United States later vaulted past Russia to
become the world's largest natural gas producer. As a result, prices dropped to
record lows, and America began to wean itself from coal, along with oil and gas
imports, which lessened its dependence on the Middle East. The surging global
gas supply also helped shrink Russia's economic clout: Profits for Russia's
state-owned gas company, Gazprom, plummeted by more than 60 percent between
2008 and 2009 alone.
Clinton, who was sworn in as
secretary of state in early 2009, believed that shale gas could help rewrite
global energy politics. "This is a moment of profound change," she
later told a crowd at Georgetown University. "Countries that
used to depend on others for their energy are now producers. How will this
shape world events? Who will benefit, and who will not?…The answers to these
questions are being written right now, and we intend to play a major
role." Clinton tapped a lawyer named David Goldwyn as her special envoy
for international energy affairs; his charge
was "to elevate energy diplomacy as a key function of US foreign
policy."
Goldwyn had a long history of
promoting drilling overseas—both as a Department of Energy official under Bill
Clinton and as a representative of the oil industry. From 2005 to 2009 he
directed the US-Libya Business Association, an organization funded primarily by
US oil companies—including Chevron, Exxon Mobil, and Marathon—clamoring to tap
Libya's abundant supply. Goldwyn lobbied Congress for pro-Libyan policies and
even battled legislation that would have allowed families of the Lockerbie
bombing victims to sue the Libyan government for its alleged role in the
attack.
According to diplomatic
cables released by WikiLeaks, one of Goldwyn's first acts at the State
Department was gathering oil and gas industry executives "to discuss the
potential international impact of shale gas." Clinton then sent a cable to
US diplomats, asking them to collect information on the potential for fracking
in their host countries. These efforts eventually gave rise to the Global Shale
Gas Initiative, which aimed to help other nations develop their shale
potential. Clinton promised it would do so "in a way that is as
environmentally respectful as possible."
But environmental groups were
barely consulted, while industry played a crucial role. When Goldwyn unveiled
the initiative in April 2010, it was at a meeting of the United States Energy
Association, a trade organization representing Chevron, Exxon Mobil, and
ConocoPhillips, all of which were pursuing fracking overseas. Among their top
targets was Poland, which preliminary studies suggested had abundant shale gas.
The day after Goldwyn's announcement, the US Embassy in Warsaw helped organize
a shale gas conference, underwritten by these same companies (plus the oil
field services company Halliburton) and attended by officials from the
departments of State and Energy.
In some cases, Clinton
personally promoted shale gas. During a 2010 gathering of foreign ministers in
Washington, DC, she spoke about America's plans to help spread fracking abroad.
"I know that in some places [it] is controversial," she said, "but natural gas is the cleanest fossil fuel
available for power generation today." She later traveled to Poland for a
series of meetings with officials, after which she announced that the country
had joined the Global Shale Gas Initiative.
That August, delegates from 17
countries descended on Washington for the State Department's first shale gas
conference. The media was barred from attending, and officials refused to
reveal basic information, including which countries took part. When Rep. Henry
Waxman (D-Calif.) inquired about industry involvement, the department would say
only that there had been "a limited industry presence." (State
Department officials have since been more forthcoming with Mother Jones: In
addition to a number of US government agencies, they say attendees heard from
energy firms, including Devon, Chesapeake, and Halliburton.)
During the cursory press
conference that followed, Goldwyn, a short, bespectacled man with a shock
of dark hair, argued that other nations could avoid the environmental damage
sometimes associated with fracking by following America's lead and adopting
"an umbrella of laws and regulations." A reporter suggested that US
production had actually "outpaced the ability to effectively oversee the
safety" and asked how we could be sure the same wouldn't happen elsewhere.
Goldwyn replied that attendees had heard about safety issues from energy
companies and the Groundwater Protection Council, a nonprofit organization that
receives industry funding and opposes federal regulation of fracking
wastewater disposal.
Goldwyn and the delegates then
boarded a bus to Pennsylvania for an industry-sponsored luncheon and tour of
some shale fields. Paul Hueper, director of energy programs at the State
Department's Bureau of Energy Resources, says the tour was organized
independently and that energy firms were only invited to the conference itself
to share best practices. "We are very firm on this," he insisted.
"We do not shill for industry."
While the meeting helped stir
up interest, it wasn't until 2011 that global fracking fever set in for real.
That spring, the US Energy Information Administration (EIA) released its
initial estimate of global shale gas, which found
that 32 countries had viable shale basins and put global recoverable shale gas
at 6,600 trillion cubic feet—enough to supply the world for more than 50 years
at current rates of consumption. This was a rich opportunity for big oil and
gas companies, which had largely missed out on the US fracking boom and were
under pressure from Wall Street to shore up their dwindling reserves.
"They're desperate," says Antoine Simon, who coordinates the shale
gas campaign at Friends of the Earth Europe. "It's the last push to
continue their fossil fuel development."
The industry began fighting
hard for access to shale fields abroad, and promoting gas as the fuel of choice
for slashing carbon emissions. In Europe, lobbyists circulated a report claiming that the European Union could save 900
billion euros if it invested in gas rather than renewable energy to meet its
2050 climate targets. This rankled environmentalists, who argue fracking may do little to ease global warming,
given that wells and pipelines leak large quantities of methane, a potent greenhouse gas.
They also fear it could crowd out investment in renewables.
By early 2011, the State
Department was laying plans to launch a new bureau to integrate energy into
every aspect of foreign policy—an idea Goldwyn had long been advocating. In
2005, he and a Chevron executive named Jan Kalicki had published a book called Energy and Security: Toward a New Foreign Policy Strategy,
which argued that energy independence was unattainable in the near term and
urged Washington to shift its focus to energy security—by boosting global
fossil fuel production and stifling unrest that might upset energy markets.
Goldwyn and his ideas had played a key role in shaping the bureau, so some
observers were surprised when he quietly stepped down just before its launch.
When I approached Goldwyn
following a recent speaking engagement in Washington, DC, to ask about his time
at the State Department and why he left, he ducked out a side door, and Kalicki
blocked the corridor to keep me from following. Goldwyn later said via email
that he had simply chosen "to return to the private sector."
Around the time of his
departure, WikiLeaks released a slew of diplomatic cables, including one
describing a 2009 meeting during which Goldwyn and Canadian officials discussed
development of the Alberta oil sands—a project benefiting some of the same
firms behind the US-Libya Business Association. The cable
said that Goldwyn had coached his Canadian counterparts on improving "oil
sands messaging" and helped alleviate their concerns about getting oil
sands crude to US markets. This embarrassed the State Department, which is
reviewing the controversial Keystone XL pipeline proposal to transport crude
oil from Canada and is under fire from environmentalists.
After leaving State, Goldwyn
took a job with Sutherland, a law and lobbying firm that touts his "deep
understanding" of pipeline issues, and launched his own company, Goldwyn
Global Strategies.
In late 2011, Clinton finally
unveiled the new Bureau
of Energy Resources, with 63 employees and a multimillion-dollar budget.
She also promised to instruct US embassies around the globe to step
up their work on energy issues and "pursue more outreach to private-sector
energy" firms, some of which had generously supported both her and
President Barack Obama's political campaigns. (One Chevron executive bundled
large sums for Clinton's 2008 presidential bid, for example.)
As part of its expanded energy
mandate, the State Department hosted conferences on fracking from Thailand to
Botswana. It sent US experts to work alongside foreign officials as they
developed shale gas programs. And it arranged for dozens of foreign delegations
to visit the United States to attend workshops and meet with industry
consultants—as well as with environmental groups, in some cases.
US oil giants, meanwhile, were
snapping up natural gas leases in far-flung places. By 2012, Chevron had large
shale concessions in Argentina, Australia, Canada, China, and South Africa, as
well as in Eastern Europe, which was in the midst of a claim-staking spree; Poland alone had granted more than 100 shale concessions
covering nearly a third of its territory. When the nation lit its first shale
gas flare atop a Halliburton-drilled well that fall, the state-owned gas
company ran full-page ads in the country's largest newspapers showing a spindly
rig rising above the hills in the tiny village of Lubocino, alongside the
tagline: "Don't put out the flame of hope." Politicians promised that
Poland would soon break free of its nemesis, Russia, which supplies the lion's
share of its gas. "After years of dependence on our large neighbor, today
we can say that my generation will see the day when we will be independent in
the area of natural gas," Prime Minister Donald Tusk declared. "And we will be setting terms."
But shale was not the godsend
that industry leaders and foreign governments had hoped it would be. For one, new research from the US Geological Survey suggested that
the EIA assessments had grossly overestimated shale deposits: The recoverable
shale gas estimate for Poland shrank from 187 trillion cubic feet to 1.3
trillion cubic feet, a 99 percent drop. Geological conditions and other factors
in Europe and Asia also made fracking more arduous and expensive; one industry
study estimated that drilling shale gas in Poland would cost
three times what it does in the United States.
By 2013, US oil giants were
abandoning their Polish shale plays. "The expectations for global shale
gas were extremely high," says the State Department's Hueper. "But
the geological limitations and aboveground challenges are immense. A handful of
countries have the potential for a boom, but there may never be a global shale
gas revolution."
The politics of fracking
overseas were also fraught. According to Susan Sakmar, a visiting law professor
at the University of Houston who has studied fracking regulation, the United
States is one of the only nations where individual landowners own the mineral
rights. "In most, perhaps all, other countries of the world, the
underground resources belong to the crown or the government," she
explains. The fact that property owners didn't stand to profit from drilling on
their land ignited public outrage in some parts of the world, especially
Eastern Europe. US officials speculate that Russia also had a hand in fomenting
protests there. "The perception among diplomats in the region was that
Russia was protecting its interests," says Mark Gitenstein, the former US
ambassador to Romania. "It didn't want shale gas for obvious
reasons."
Faced with these obstacles, US
and European energy companies launched a lobbying blitz targeting the European
Union. They formed faux grassroots organizations, plied lawmakers with
industry-funded studies, and hosted lavish dinners and conferences for
regulators. The website for one industry confab—which, according to Friends of
the Earth Europe, featured presentations from Exxon Mobil, Total, and
Halliburton—warned that failure to develop shale gas "will have
damaging consequences on European energy security and prosperity" and
urged European governments to "allow shale gas exploration to
advance" so they could "fully understand the scale of the
opportunity."
US lobbying shops also jumped
into the fray. Covington & Burling, a major Washington firm, hired several
former senior EU policymakers—including a top energy official who, according to the New York Times, arrived with a
not-yet-public draft of the European Commission's fracking regulations.
In June 2013, Covington
staffer Jean De Ruyt, a former Belgian diplomat and adviser to the European
Commission, hosted an event at the firm's Brussels office. Executives from
Chevron and other oil and gas behemoths attended, as did Kurt Vandenberghe,
then one of the commission's top environmental regulators. These strategies
appeared to pay off: The commission's recently released framework for
regulating fracking includes recommendations for governments but not firm
requirements. "They chose the weakest option they had," says Simon of
Friends of the Earth Europe. "People at the highest level of the
commission are in the industry's pocket."
Goldwyn was also busy
promoting fracking overseas—this time on behalf of industry. Between January
and October 2012, his firm organized a series of workshops on fracking for
officials in Bulgaria, Lithuania, Poland, Romania, and Ukraine, all of them funded
by Chevron. The events were closed to the public—when Romanian journalist Vlad
Ursulean tried to attend the Romanian gathering, he says Goldwyn
personally saw to it that he was escorted out.
Goldwyn told Mother Jones that
the workshops featured presentations on technical aspects of fracking by
academics from the Colorado School of Mines and Penn State University. Chevron,
he maintains, had "no editorial input." But all of these
countries—except Bulgaria, which was in the midst of anti-fracking
protests—would later grant Chevron major shale concessions.
In some cases, the State
Department had a direct hand in negotiating the deals. Gitenstein, then the
ambassador to Romania, met with Chevron executives and Romanian officials and
pressed them to hand over millions of acres of shale concessions. "The
Romanians were just sitting on the leases, and Chevron was upset. So I
intervened," says Gitenstein, whose State Department tenure has been
bookended by stints at Mayer Brown, a law and lobbying firm that has
represented Chevron. "This is traditionally what ambassadors do on behalf
of American companies." In the end, Romania signed a 30-year deal with
Chevron, which helped set off massive, nationwide protests.
When the government began
weighing a fracking ban, it didn't sit well with Gitenstein, who went on
Romanian television and warned that, without fracking, the nation could be
stuck paying five times what America does for natural gas. He added that US shale prospectors had "obtained great
successes—without consequences for the environment, I dare say." The
proposed moratorium soon died.
A few weeks later, Chevron was
preparing to build its first fracking rig near Pungesti, a tiny farming village
in northeastern Romania. According to a memo from the prime minister's office, a Romanian official
met with Chevron executives and an embassy-based US Commerce Department
employee to craft a PR strategy for the project. They agreed to organize a
kickoff event at Victoria Palace in Bucharest. As a spokesman, they would tap
Damian Draghici, a charismatic Romanian lawmaker who was a "recognized
personality among the Roma minority," which had a "considerable
presence" around Chevron's planned drilling sites. "It was really
extraordinary—the level of collaboration between these players," says
Ursulean, who has written extensively about Chevron's activities in Romania.
"It was as if they were all branches of the same company."
The strategy did little to
soothe the public's ire. When Chevron finally did attempt to install the rig in
late 2013, residents—including elderly villagers who arrived in horse-drawn
carts—blockaded the planned drilling sites. The Romanian Orthodox
Church rallied behind them, with one local priest likening Chevron to enemy
"invaders." Soon, anti-fracking protests were cropping up from Poland to the United Kingdom. But Chevron didn't back down. Along with
other American energy firms, it lobbied to insert language in a proposed US-EU
trade agreement allowing US companies to haul European governments before
international arbitration panels for any actions threatening their investments.
Chevron argued this was necessary to protect shareholders against
"arbitrary" and "unfair" treatment by local authorities.
But environmental groups say it would stymie fracking regulation and point to a
$250 million lawsuit Delaware-based Lone Pine Resources has
filed against the Canadian province of Quebec for temporarily banning fracking
near a key source of drinking water. The case hinges on a similar trade
provision.
Despite the public outcry in
Europe, the State Department has stayed the course. Clinton's successor as
secretary of state, John Kerry, views natural gas as a key part of his push
against climate change. Under Kerry, State has ramped up investment in its
shale gas initiative and is planning to expand it to 30 more countries, from
Cambodia to Papua New Guinea.
Following the Crimea crisis,
the Obama administration has also been pressing Eastern European countries to
fast-track their fracking initiatives so as to be less dependent on Russia.
During an April visit to Ukraine, which has granted concessions to Chevron and
Royal Dutch Shell, Vice President Joe Biden announced that the United States
would bring in technical experts to speed up its shale gas development.
"We stand ready to assist you," promised Biden, whose son Hunter has since joined the board of a Ukrainian energy company.
"Imagine where you'd be today if you were able to tell Russia: 'Keep your
gas.' It would be a very different world."
This story was supported by
the Fund for Investigative Journalism.
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